Local Search to Continues to Show Promise for Small Businesses

With local search coming into its own and small businesses beginning to understand the potential impact of local search marketing on their bottom line. Options like online yellow pages advertising, pay-per-call advertising and online classifieds open up new advertising opportunities for small businesses that are used to more traditional forms of advertising. Pay-per-call style options also offer up more accessible forms of search marketing for the millions of small businesses that still lack a web presence of their own.

According to new data released this week by the Kelsey Group, growth rates for small businesses favorite offline marketing outlets (the yellow pages and print classified ads) are expected to remain stagnant or to lose ground over the next five years. On the other hand, local search, which includes online classified, online yellow pages and the lucrative pay-per-call industry is expected to grow to $13 billion by the end of the decade.

"The traditional products, the newspaper classifieds, and print Yellow Pages are going to see flat or negative growth, and negative growth in the case of classifieds," Kelsey Group Analyst Greg Sterling told MediaPost Publications. "We're going to see a trend towards more performance media, where value is proven and self-evident to the advertiser, and that's the influence of Internet on traditional marketing."

The interesting thing isn't just the strong growth rates for online local search, but how and where those growth rates break down break down. While online classified ads are expected to grow about 8% a year, pay-per-call is expected to grow more than 130% annually, reaching $3.7 billion in spending by 2010. That's up from just $57 million last year.

It's also interesting to note how the new online advertising options are influencing traditional offline options. For example, earlier this month, pay-per-call technology firm Jambo announced that it had signed a deal with LA Weekly to run pay-per-call ads in upcoming editions of the print publication. The move shouldn't come as a huge surprise, even Google is now working with print advertisers to auction off leftover ad space.

The question is, how long will you wait before you begin testing some of these options? With some localized service companies looking at cost-per-lead rates of up to $100, the first firms that move toward testing these new advertising models are likely to find themselves jumping light years ahead of their competitors.

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